BMW loses steam after forecasting end to price hikes

© Reuters.

By Geoffrey Smith 

Investing.com -- BMW (ETR:BMWG) shares faltered in early trading in Germany on Wednesday despite the carmaker giving a generally upbeat forecast for the year ahead.

The group said it expects to generate a profit before interest and taxes of between 8% and 10% of sales in 2023, a number that's in line with its historical range and reflects a normalization of business after three wild years of upheaval caused by the pandemic and the transition to electric mobility.

However, investors zeroed in on a line that said it expects prices to stabilize, suggesting that the company has exhausted its capacity to pass on higher input costs to its largely wealthy customer base. Some sharp price increases last year helped BMW raise its net profit by 49% to €18.6 billion (€1 = $1.0730), despite a 2.4% drop in deliveries. Deliveries are expected to increase only "slightly" in the coming year, it noted.

The group predicted a year of "profitable growth in a persistently challenging business environment," marked by strong growth in sales of its electric vehicles, which more than doubled last year to account for 9% of deliveries. Another 9% of its sales were hybrids.

This year, it expects the share of battery electric vehicles to rise to 15%, chief executive Oliver Zipse said in a statement. The company says it's on track to reach its target of 10 million EV sales a year well ahead of its 2030 deadline.

The main growth drivers in 2023 will be BEVs and models from its high-end premium segment, which includes the BMW 7 Series and the Rolls-Royce (LON:RR) brand. Here, the group expects growth of around 15%, with BEV sales nearly doubling.

By 05:15 ET (10:15 GMT), BMW stock was up 0.1% in Frankfurt, roughly unchanged from a year ago, when Russia's invasion of Ukraine upended the business model of most German manufacturers.